By Staff | January 28, 2008 | Last updated on January 28, 2008
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(January 28, 2008) Finally, some good news for the markets. The Scotiabank Commodity Price Index Report reveals that oil, potash, gold and wheat all reached new record highs in early 2008.

Gold prices broke records when bullion hit $913 per ounce in mid-January, while potash leapt from $265 per tonne in November to $302.50 in December, up 72.9% year over year. It’s expected that potash prices will continue to climb through the first half of 2008 due to increased global interest in biofuels and tight world supplies of grains and oilseeds.

Oil prices hit a record high of $100.09 in early January, but crude is now hovering around $90, while copper prices rallied to $3.20 a pound this month, after dropping to $2.99 in December.

While prices are strong now, that doesn’t mean they’ll stay solid. Scotiabank expects market conditions to remain volatile for some time.

“After easing in December, commodity prices entered 2008 with considerable strength,” says Patricia Mohr, vice-president, economics and commodity market specialist at Scotiabank. “While renewed concern over a sharp U.S. economic slowdown dampened commodity prices in mid-January, aggressive monetary policy easing by the Federal Reserve Board, prospects for a U.S. fiscal stimulus package and the release of strong GDP growth statistics for China have steadied commodity prices, at least temporarily.”

She says China’s growth rate soared to 11.4% in 2007, the highest in 13 years. Although China’s growth will probably slow in 2008 to 10.5%, the country is “increasingly decoupling from U.S. growth,” says the bank.

(01/28/08) staff


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